If you’re looking to sell your home and have been researching real estate agents and real estate commission, chances are you’ve come across terms like “low commission real estate agents”, “flat fee real estate agents”, or even “no commission real estate agents”. These terms can sound pretty appealing to someone wary about the commission fees that traditional real estate agents charge. Today we’re answering all of your fixed fee real estate questions so you can make an informed decision when it comes to the process of selling your property.
Fixed Fee Real Estate FAQs
What is a fixed-fee real estate agent?
A fixed-fee real estate agent is exactly what it sounds like. These brokers or agents sell your home for a predetermined rate rather than base it on a commission percentage of what your home sells for. So, fixed-rate real estate agents or fixed-fee real estate agents will take the same amount whether your house sells for $280,000 or $820,000. The typical fixed fee in Australia is currently between $7000 and $10,000, although this can differ between real estate agents.
The fixed fee real estate model has recently gained traction in the US and UK, so it’s no wonder we’re seeing this new payment structure take shape in Australia. The fixed fee is typically lower than the commission fees real estate agents charge. There are also local and online-only fixed-fee property agents available.
How do fixed-price real estate agents operate?
So, how does a fixed-fee agent operate? Here’s a general step-by-step guide:
- The first step is getting the fixed-fee agent to complete a property appraisal and recommend a sale price.
- Once you and the agent agree on a list price, the next step is to ensure you know exactly what is covered in their fixed fee, which you generally pay upfront. Some things are an additional fee, which we discuss below.
- Then you have to sit and wait for your property to sell. If your property doesn’t sell, the downside to a fixed-fee arrangement is that you typically forfeit the fee after a specific period.
What is covered in the fixed fee?
The fixed fee generally includes a property appraisal and advertising and marketing costs, including signboards, floor plans and listings on and offline. Managing open houses, auction costs and additional marketing like distributing flyers locally are typically an additional cost.
How do real estate commissions work?
So, now you know how fixed-fee real estate agents work, let’s compare them to commission real estate agents. A real estate agent’s commission is calculated as a percentage of your property’s selling price. Some commissions include advertising and marketing costs, while some designate this as an additional fee. Remember that marketing fees can be as little as $1000 or as extravagant as $10,000, depending on the campaign and location. Organising an auction is also typically an additional fee.
The key to commissions is that they’re designed to encourage your agent to go the extra mile and provide the highest level of service to get your property sold at the best possible price. The higher the amount, the more money the agent gets, so it’s a win-win deal. In comparison, it doesn’t matter to a fixed-fee real estate agent what your property sells for, as the amount they receive remains the same. They also receive the fee whether or not your property sells.
A real estate agent’s commission is always flexible, so sellers should feel free to negotiate for the best deal. Commission rates differ depending on where you live, but the Australian industry average is currently 2% of the final sale price. At LocalAgentFinder, we make it easy for you to compare the commission fees of real estate agents in your local area.
Wondering how much commission you should pay? Read our in-depth Real Estate Agent Fees & Commissions page.
What is a no-commission real estate agent?
No commission, low commission or capped fee are interchangeable terms for fixed-fee real estate agents. There are so many terms, but the basis is the same. You pay the agent a low fixed fee instead of a commission for the sale of your property.
What are no sale, no fee estate agents?
This is another real estate term you’ll discover as you dig deeper into commissions. As the name suggests, if there’s no sale, there’s no fee. So you only pay the agent’s commission and advertising costs upon them selling your property. If there’s no buyer and your property doesn’t sell, you don’t have to hand over any money. It’s a helpful way to mitigate the risk of paying exorbitant fees in the off-chance your home doesn’t sell.
What is the difference between a full-service and a limited-service flat-fee agent?
It’s important to note that there is also a distinction between fixed-rate agents themselves. A full-service flat-fee agent provides much more support and will assist with home valuations, listing your house on real estate sites, organising open houses and helping negotiate offers.
On the other hand, limited-service agents are more likely to simply list your home on a site and leave the rest of the heavy lifting to you. If you decide that a limited-service agent is the way to go, ensure you know what level of service you’ll receive.
What are the benefits of using a fixed-fee real estate agent?
There are several reasons sellers decide to go with fixed-fee property agents, such as:
- The possibility of saving thousands of dollars in commission fees that would normally increase according to your property value. Paying less and gaining more profit from the sale proceeds is the biggest advantage of going down the fixed fees route.
- Houses generally don’t stay on the market for long. These agents need to have a high turnover to make enough money throughout the year. Therefore they’ll be hungrier to sell and will work harder to take your house off the market.
- You know upfront all the costs involved in selling your home, which gives many homeowners peace of mind.
- If you choose an online no-commission service compared to a local agent, you’re in control but have support every step of the way. If you’re a seller that wants to be in the driver’s seat and have control over the open homes, selling method and marketing, then an online fixed-fee service will suit you. It’s like a private sale with backup.
What are the disadvantages of fixed-fee real estate agents?
While the benefits are promising, we must balance them out with these disadvantages:
- A fixed-rate real estate agent has no incentive to sell your house. They get paid even if your home isn’t sold, so they don’t have to put any effort into selling if they don’t want to.
- On the other hand, because their sales model is focused on high turnover, they’re less concerned with the final sale price. It doesn’t matter to them what your house is sold for, as they get paid no matter what. In comparison, a commission real estate agent is incentivised to secure the best possible price for you, which means a higher commission for them.
- You must be comfortable paying the fixed-fee cost upfront and forfeiting it if there’s no sale.
- Some fixed-priced agencies operate Australia-wide, so you might not even work with a local agent. When you need help, your only option sometimes is to reach out to a national call centre.
Are fixed-fee real estate agents worth it?
At the end of the day, with a fixed-fee real estate agent, you get what you pay for. Traditional real estate agents charge a commission for the massive amount of work that goes into their role. Their services include listing the property, helping with contractual admin, marketing the house and making your home beautiful for open house viewings.
They will negotiate with buyers for the highest offer possible for your property, as this directly affects the amount they get paid. We genuinely believe that while fixed-rate agents may save you some money, the value and services traditional real estate agents bring to the selling process are unmatchable.
Nevertheless, it also depends on where you live. For example, if you’re looking to sell in the booming Sydney property market, the commission on a $1 million investment property can easily be around $20,000. However, fixed fee agents typically charge at least half that amount. Sydney properties rarely stay on the market for extended periods either, so looking into a fixed-rate agent in this instance might be work.
Trust your gut and think about what works best for you and your situation.
How do I find low-commission real estate agents?
The best place to find the right agent for you and your property, whatever their commission structure, is LocalAgentFinder. We believe that an expert real estate agent can make a huge difference when you sell your property. We have the most comprehensive comparison of real estate agents in Australia, from real estate agents in Bendigo to real estate agents in Baulkham Hills.
Finding the right agent to work with you is imperative, and that’s why sellers love our site. All you have to do is enter your property details, and we’ll bring up a relevant agent panel for you with all the information you need.
From here, you can compare selected local agents according to their experience, the number of properties they’ve sold, the median price they sell properties for, how long their properties normally stay on the market and more. You can then quickly contact several agents to find the one best suited to your needs.
For more information on low-commission real estate agents, read our article: Working with Low Commission Real Estate Agents.